Al Qaeda money still being traced to gems and gold

Gary Roskin, G.G., FGA, JCK Senior Editor -- JCK Online, 6/19/2002 2:00:00 AM

The Washington Post is again supporting claims of a link between al Qaeda and the gem industry.

In a story published June 18, Post reporters Karen DeYoung and Douglas Farah wrote that gold, diamonds, and other gems (including sapphires and tanzanite) are being said to finance al Qaeda, making it difficult for the U.S. government to halt the flow of terrorist funding. While Farah and DeYoung have what appears to be reliable sources--including a recent UN report and a U.S. Government report--there were no concrete facts given by these sources supporting such claims.

Farah was interviewed about the report on National Public Radio (NPR) later that day, at which time he also mentioned emeralds. In a conversation with JCK he also mentioned lapis. The NPR segment focused on “clever asset management” by al Qaeda—moving money so it can’t be traced and frozen by the United States or other governments.

“They decided to limit their exposure in the formal financial sector as much as they could, and then they moved into commodities such as gold, diamonds, sapphires, honey, where they buy things that could hold their value, are relatively easy to move, and could not be traced,” said Farah, not stating any source for this information. “Clearly, diamonds and gold go across borders. Obviously, things like sapphires and emeralds, which they also used fairly extensively, are very easy to transport—and they hold their value.”

Farah and DeYoung, using two recently published reports—one by the United Nations, another by the Deputy Secretary of the U.S. Treasury—noted that small amounts of gems can be released into the market without attracting attention. “Those are the most valuable and interesting [commodities] to them,” says Farah.

Mike O’Keefe, the State Department’s desk officer for Tanzania and Madagascar, on the other hand has said repeatedly over the past few months, with the backing of both the CIA and the FBI, that there is no current evidence linking tanzanite to al Qaeda. There are others in the State Department who have told the Washington Post and JCK that such a link cannot be completely disproved, but no proof was offered either.

The Associated Press reported that Treasury Secretary Paul O’Neill said the Bush administration is still “aggressively trying to choke off sources of terrorist financing.” But O’Neill acknowledges that large sums are moving from al Qaeda bank accounts to untraceable gems and other commodities. O’Neill rejects, however, the notion that this is hurting the campaign to halt terrorist funding. But according to The Washington Post report, al Qaeda’s finances haven’t been touched since the switch to gems.

During a recent speech to the Council on Foreign Relations in New York, Deputy Treasury Secretary Kenneth W. Dam said al Qaeda will avoid keeping its money in the United States or other financial centers with effective rules and regulations. “They will use informal methods of moving their money. They may avoid storing value currency at all, instead preferring commodities like gold or diamonds, converting the commodities to cash only as needed.”